Cliffs Natural Resources is forcing the McGuinty government’s hand on the pricey issue of power in Ontario.

The Cleveland-based iron ore and coal miner has put the ball squarely in the provincial government’s court by agreeing to place a ferrochrome refinery in Ontario only if Queen’s Park comes to terms on an acceptable power rate.

A much-anticipated project description of Cliffs’ Chromite project in the James Bay Ring of Fire was released Feb. 4 naming Sudbury as the front-runner to host the ore processing.

Cliffs’ president of ferroalloy Bill Boor said, although the Sudbury suburb of Capreol is the most “technically feasible” site for the ferrochrome processing, there is no place in Ontario that makes economic sense with the price of power at its current provincial rates.

“The availability of a large, reliable and cost-competitive supply of electricity is a key consideration in locating the appropriate site of the ferrochrome production facility,” said Boor in a conference call with reporters.

Cliffs said the electric arc furnaces only used in ferrochrome production require 300 megawatts of power.

Boor declined to put a number on what Cliffs considers an acceptable power rate but added that although they have a strong interest to keep the processing in Ontario, the copany will look outside the province.

The company said it’s keeping its options open in meeting with other Northern communities, namely Timmins, Thunder Bay and the rural municipality of Greenstone.

“The location of an Ontario furnace site is still being evaluated,” said Boor.

Timmins Mayor Tom Laughren said Cliffs’ message is clear, that Ontario won’t get a sniff of the processing or stainless manufacturing jobs until power rates come in line with other provinces still smarting from the loss of 700 jobs in his city last year following the closure of the Xstrata Copper metallurgical site -- and the shifting of production to a Quebec smelter supplied with cheaper power -- Laughren said having competitive energy rates in Ontario are an “economic development tool.”

“That would mean that we would be able to give companies like Cliffs, or mining and pulp and paper companies a break on energy.”

“We can all compete for the project individually...but at the end of the day, if we do not get energy rates in line with what their (Cliffs) expectation is...none of us is going to see it.”

Northern Development, Mines and Forestry Minister Michael Gravelle said his government has already delivered some “significant” incentives to cut electricity costs for the resource industry with its three-year, $450-million Northern Industrial Energy Rate program, and its more recent Industrial Conservation Initiative.

“That’s a very signficant way that we are making the province far more competitive in comparison to Manitoba and Quebec.”

When asked if those programs go far enough to secure long-term power guarantees for what Cliffs describes as a “multi-generational” regional mining, transportation and processing project, Gravelle ac­knowledged that Premier Dalton McGuinty recognizes there are ongoing challenges and their next round of discussions with Cliffs will key in on power and transportation infrastructure issues.

When asked if the province plans to sweeten the pot with additional incentives come September when Cliffs expects to enter the full feasibilty stage, Gravelle would only diplomatically repeat his government’s stance that they are “committed to see the processing faciliity in Northern Ontario.

“We are pleased that Cliffs has identified the locations where this might happen and we are conscious that indeed there further challenges relating to the energy costs as related by Cliffs.

“We recognize what the timeframe is and when they want to get to feasibilty stage and we are eager to enter into those discussions.”

Cliffs’ Black Thor chromite deposit in the McFaulds Lake or Ring of Fire area contains an inferred mineral estimate of 69.5 million tonnes of a grade of 31.9 per cent. Chromite is a key ingredient in the manufacturing of stainless steel.

Now at the prefeasibilty stage, Cliffs has outlined massive plans to mine, transport and process chromite from an open pit.

A prefeasibility study is expected to be completed by September. If the economics prove favourable, a full feasibility study would begin in September and is expected to be complete by late 2012. Chromite production could begin in 2015.

In what Cliffs is referring to as its “base case” scenario, ore from Black Thor will be transported by haul truck down a proposed 300-kilometre permanent road from the Black Thor deposit to a railhead near the northwestern Ontario village of Nakina and loaded onto CN freight for direct delivery to Sudbury for final processing.

As many as 1,300 direct jobs could be created with 300 to 500 jobs at the remote mine site, 200 to 300 in transportation, and 400 to 500 in a ferrochrome production facility.

According to the plan, the first 10 to 15 years of mine life will be from two open pits with the possibility of going underground.

The project details outline a 6,000- to 12,000-tonne-per-day mine. An on-site ore chromite processing facility would handle between 3,600 and 7,200 tonnes per day at full production. It would produce a concentrate suitable for refining before its transported out on haul trucks.

Cliffs officials have been scoping possible processing sites in Northern Ontario for more than a year.

Their preferred location is a 5,000-acre brownfield site north of Capreol known decades ago as Lowphos Ore, a subsidiary of National Steel Corp. which began open-pit iron ore mining near Moose Mountain in 1959.

Helen Mulc, manager of business development with the Greater City of Sudbury, declined a request for an interview to comment on their dialogue with Cliffs.

A kilometre-long railway spur line once ran onto the property which connected to the CN main line that runs west to Nakina.